A most critical component of a winning Go to Market (GTM) plan is a clear definition of your Target customer. Unless this is done right, there is no point in investing time on anything else like Pricing, Sales, Channels, Positioning and Messaging.
Let’s take the analogy of an Archery target board to understand the importance of Target customer better.
- Your ideal target customer is the bullseye in yellow, where you should focus all your energy and money. By doing so, your overall sales productivity will be significantly higher. Why? You built the product for this segment. You have good knowledge about customer problems and their industry. So you will be able to understand and empathize better. Also, not many product customizations will be required.
- The next circle in red represents a segment which is different but related to the bullseye. For example, if the Pharmaceutical industry is your target segment, Medical devices can be an excellent related segment. If you have a good deal, it is worth stretching a bit to cater to this segment.
- The outer circle represents a critical segment. The one, you should never pay attention to at all! Thus, significantly saving your resources.
A common problem I see both in startups and larger enterprises is that they get distracted by opportunities outside the target segment. One of the reasons for this is to quickly on-board few customers. I understand the urgency. Hence, I believe it is even more important to stay focused on the target market. There will be hundreds of very relevant opportunities in your target segment. Just that, enough effort has not been put to research and uncover these opportunities, the distractors get entertained.
“The essence of strategy is choosing what not to do.” – Michael Porter
How to define your target customer segment?
Many organizations define their target customer based on industry, size, and geography. It is a good starting point. However, it is not enough to maximize the returns on the time and money invested. Refine your target customer profile further by considering a few more important factors.
- Does your product target specific technology users only? E.g., SAP or Oracle ERP, Microsoft or Amazon cloud.
- What level of maturity in technology adoption is ideal for you? E.g., new and tribal or stable and mature?
- What is the annual technology spend? How big is the in-house technology team?
Check, if there is any specific business situation that you can leverage. For example:
- A specific industry is witnessing consolidation with Mergers and Acquisitions
- A regulatory change in particular geography is impacting Finance and Compliance functions
- Are you more suited to companies which have captive Shared Services Organizations?
After you define your ideal customer profile, the next important step is to develop a deep understanding of the various personas involved in the buying cycle like CXO, Business Head, Technology Architect, Delivery Manager, and Business User. Work hard in understanding their KPIs and priorities. This will significantly help you in building the other components of your GTM plan.
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” – Sun Tzu, a Chinese military strategist.